News

Member Update: Business Maverick reporting

10 February, 2021

Dear Member,

We communicated previously that the Eskom Pension and Provident Fund ("the EPPF" or "the Fund") had been the subject of a series of negative reports by the Business Maverick over the past twelve months.

 

 The Fund has ensured that we provide corrections and context where appropriate, and even lodged a successful complaint against the publication with the Press Council Ombudsman. In the period following the favourable ruling by the Press Council Ombudsman, we noted that the reporting had become more balanced.

However, in the past two months, the Business Maverick has published three articles about the Fund, most recently on 1 February 2021. We have noted a particular article titled Is Eskom's pension fund a defined contribution or defined benefit fund? with concern due to the number of incorrect statements made in it. The report is not a true reflection of the facts, and it is critical that we provide clarity and context to our valued stakeholders.

The Fund's benefit structure

The article suggested incorrectly that the Fund has changed its benefit structure into becoming a defined contribution fund. This is not true. There has been no change in the Fund's benefit structure. We continue to provide our members and pensioners the same benefits, in accordance with the EPPF Fund Rules ("Rules"). The Fund's valuation report, as issued by the independent actuaries, clearly demonstrates the Fund's ability to honour our benefit structure obligations as set out in the Rules.

Eskom accounting treatment of the Fund

The article refers to the accounting treatment of the Fund in the financial statements of Eskom Holdings SOC Ltd (Eskom). Eskom and its auditors make decisions regarding the assets and liabilities that are reflected on Eskom's balance sheet. The issue of how the Fund liabilities are accounted for by Eskom is not a decision made by the EPPF. The accounting technicalities do not change the nature of the Fund nor its obligations, nor those of the principal employer. These obligations are defined by the Rules of the Fund.

Article corrections and context 

We believe that some of the statements made in the Business Maverick article need to be corrected or placed in context. These are listed below.

1. Defined contribution funds generally transfer the risk of market volatility to members, but often this is a preferable outcome because members pensions are increased".

This statement is inaccurate. Defined contribution funds transfer the risk of market volatility to members. This transfer of market risk is favourable in periods when investment returns are high, but in volatile and declining markets - as we have experienced in recent years - this is certainly not a preferable outcome. It is also worth pointing out that defined contribution funds do not guarantee pension increases or benefit payments.

Defined benefit funds, on the other hand, enable benefit payments linked to years of service and pensionable salary and therefore provide greater certainty. Eskom pensioners who retired during the recent market volatility retired with the benefits that were promised to them under the Rules of the Fund. Pensioners who retired from defined contribution funds had to bear the full impact of negative to low investment returns on their pension funds.

2. This has put the fixed funding model at serious risk. The liabilities of the EPPF according to the valuator's certificate included in the 2020 financial statements were approximately R101-billion, but even if the fund drops in value by as little as 1%, that is a loss of R1-billion, which our economy will struggle really hard to withstand".

The article has omitted the fact that the assets comparable to these liabilities are R143 billion for the corresponding reporting date - this is a healthy funding ratio of 135%. While we accept that no one can predict future asset growth given the current economic climate, the EPPF's assets have in fact grown beyond R155-billion over the last six months.

3. And it is well documented that the fund is playing the private equity field hard, and such investments are way too illiquid for a rainy day."

The Fund's investments in private equity are minimal in the context of the total investment portfolio. More than 90% of the Fund's investments are in highly liquid listed investments that can be converted to cash within a very short period of time. The Fund invests in private equity in order to diversify the portfolio, and to enhance investment returns.

The total assets invested in private equity amount to R3,4 billion, with an additional R1,1 billion invested in development impact investments. This amounts to 3% of the Fund's total assets as at 30 June 2020. The Fund's exposure to private equity markets is well below the prescribed limits for private equity investments set out in Regulation 28 of the Pension Funds Act.

4. Over the last two years, the increase awarded to the pensioner community was cut to just 1%".

This is factually incorrect - the pensioner increase was 2% for 2020 and 3% for 2021. In addition to this increase, pensioners received their annual bonus as well as a special relief COVID-19 bonus paid in July 2020.

5. "Eskom as the employer still fills the most seats at the table of trustees. Eskom executive appoints six representatives, and currently, employees have two seats".

The Board of Fund is comprised of 14 trustees who are appointed as follows:

  • Active members and pensioners of the Fund elect 50% of the 14 trustees:
    • Three bargaining unit representatives
    • Two non-bargaining representatives
    • Two pensioner representatives
  • The remaining seven members comprise of:
    • Two independent representatives
    • Five employer representatives

Conclusion 

We reassure you that the Fund remains committed to serving our members and pensioners, and to securing your pension benefits. We will continue to keep you updated and informed regarding Fund matters.

Relevant information about the Fund and its benefits can be found at www.eppf.co.za. Members and pensioners are also welcome to contact our Call Centre on 0800 11 45 48 or info@eppf.co.za to gain further clarity on these matters. 

 

Kind regards, 

Linda Soga Mateza 

Chief Executive and Principal Officer Eskom Pension and Provident Fund

Previous articles

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​EPPF Launches it's Revised B-BBEE Policy
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Update: Unauthorised Debit Orders
Update: Former Eskom GCEO pension pay-out
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Advice: Take a stand against fraud and protect yourself
Impact of Steinhoff International on the EPPF
High court ruling on former Eskom GCEO pension pay-out case
Eskom Pension and Provident Fund (EPPF) appoints first-ever female Chief Executive and Principal Officer
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EPPF calls for asset owners to promote transformation at the third EPPF Transformation Breakfast
Repayment of Benefits by Former Eskom GCEO
Appointment of Ms Linda Mateza as EPPF Chief Executive and Principal Officer
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EPPF hosts PEWIN breakfast roundtable
Introduction to Default Regulations
Employee Profile: meet Tetelo Mabona
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RESPONSE TO MEDIA ARTICLE ON EPPF’S INVESTMENT IN MPANDE PROPERTY FUND
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EPPF COVID19 (CORONAVIRUS) MEMBER UPDATE
UPDATE: EPPF OPERATIONS DURING THE 21 DAY NATIONAL LOCKDOWN AS A RESULT OF COVID-19
Provisional Trustee Election Results
IMPACT OF CORONAVIRUS (COVID-19) AND THE RATINGS DOWNGRADE ON THE EPPF INVESTMENT PORTFOLIO
Trustee Elections 2019/20 results announcement
EPPF and Global ASP matter
EPPF changes to new pension administration system
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Announcement: COVID-19 relief special bonus for EPPF pensioners
NEW EPPF BOARD APPOINTMENTS
UPDATE – BUSINESS MAVERICK REPORTING ON EPPF SANCTIONED BY PRESS COUNCIL
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MEMBER UPDATE: NOVEMBER 2020
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2020 Integrated Report
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MEMBER UPDATE – APRIL 2021
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EPPF Message from the Chief Executive and Principal Officer
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2021 Tax Certificate re-issue
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Withdrawal of retirement savings by active members
Amended Fund Rules
THE ENHANCED EPPF MOBILE APP FINALLY HERE!
Congratulations to all our winners
The Minimum Individual Reserve (MIR) explained
The EPPF partners with Equites Property Fund in logistics deal
EPPF’s Digital Transformation Journey
2022 Pensioner increase and bonus
Message from the Chief Executive
Member Update - October 2021
2021 Integrated Report
Member regulatory update: Release of the Two Retirement Reform Discussion
Eskom splits off transmission division
Member Update - January 2022
Letter to Pensioners
EPPF appoints new Chief Financial Officer
Member Regulatory Update: Regulation 28 Amendments
Pensioner Tax Update
Message from the Chief Executive and Principal Officer
Member Update March 2022
How EPPF members are helping job sustainability
Pensioner Talk - September 2016
EPPF Member Guide
Pensioner Talk - April 2016
Pensioner Talk - July 2015
Pensioner Talk - October 2014
Pensioner Talk - October 2013
Pensioner Talk - May 2013
Pensioner Talk - December 2012
Pensioner Talk - July 2012
Pensioner Talk - March 2012
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Pensioner Talk - April 2011
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Power Talk - September 2016
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Power Talk - July 2015
Power Talk - October 2014
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Power Talk - December 2010
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Pensioner Talk March 2017
Pensioner Talk November 2017
Power Talk October 2017
Power Talk March 2018
Pensioner Talk 1st Issue 2018
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Power Talk 3rd Issue 2019
August Pensioner Talk 2019
September Power Talk 2019
December Pensioner Talk 2019 (Festive Edition)
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Power Talk May 2020
Pensioner Talk May 2020
Pensioner Talk July/August 2020
Power Talk July/August 2020
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Pensioner Talk November 2021
Power Talk October - November 2021
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What is the difference between a defined benefit and a defined contribution fund?
Can I borrow money against my pension benefit for a loan or my bond?
What happens if my queries are not getting resolved?
How is the Board of Trustees appointed?
How is a section 37C death benefit distribution determined?
In-service members FAQs
Deferred pensioners FAQs
Pensioners and beneficiaries FAQs
Retirement reform FAQs
uygyugugu kjhiu iji
Can I choose an investment portfolio that my funds can be invested in?
Does the EPPF have both Pension and Provident Fund?
Can you pay my withdrawal benefit to the Eskom Finance Company?
Governance
​EPPF Launches it's Revised B-BBEE Policy
EPPF's Affordable Housing Investment to Positively Impact SA's Development
Update: Unauthorised Debit Orders
Update: Former Eskom GCEO pension pay-out
Bonus and Pension Increase Announcement
Advice: Take a stand against fraud and protect yourself
Impact of Steinhoff International on the EPPF
High court ruling on former Eskom GCEO pension pay-out case
Eskom Pension and Provident Fund (EPPF) appoints first-ever female Chief Executive and Principal Officer
The EPPF Transformation Breakfast
Bonus and Pension Increase Announcement 2018
Board announcement to stakeholders
THE POSITION OF THE FUND ON PRESCRIBED ASSETS
Supreme Court of Appeal ruling on former Eskom GCEO pension pay-out case
Trustee Elections 2019/20
EPPF calls for asset owners to promote transformation at the third EPPF Transformation Breakfast
Repayment of Benefits by Former Eskom GCEO
Appointment of Ms Linda Mateza as EPPF Chief Executive and Principal Officer
RESPONSIBLE INVESTING BY PENSION FUNDS: THE ABC OF ESG
EPPF hosts PEWIN breakfast roundtable
Introduction to Default Regulations
Employee Profile: meet Tetelo Mabona
Introduction to default regulations
2019 PENSIONER INCREASE AND BONUS
Former Eskom GCEO pension pay-out update
Trustee Elections : Voting phase
EPPF Member/Pensioner Update - Message from the Chairman
Media report on EPPF administration
EPPF Member Update - Message from the Chairman
RESPONSE TO MEDIA ARTICLE ON EPPF’S INVESTMENT IN MPANDE PROPERTY FUND
EPPF COVID-19 (CORONAVIRUS) MEMBER UPDATE
EPPF COVID19 (CORONAVIRUS) MEMBER UPDATE
UPDATE: EPPF OPERATIONS DURING THE 21 DAY NATIONAL LOCKDOWN AS A RESULT OF COVID-19
Provisional Trustee Election Results
IMPACT OF CORONAVIRUS (COVID-19) AND THE RATINGS DOWNGRADE ON THE EPPF INVESTMENT PORTFOLIO
Trustee Elections 2019/20 results announcement
EPPF and Global ASP matter
EPPF changes to new pension administration system
Announcement - Eskom Employee Benefits department
Announcement: COVID-19 relief special bonus for EPPF pensioners
NEW EPPF BOARD APPOINTMENTS
UPDATE – BUSINESS MAVERICK REPORTING ON EPPF SANCTIONED BY PRESS COUNCIL
Member Update: EPPF's digital transformation journey
MEMBER UPDATE: NOVEMBER 2020
2021 Pensioner increase and bonus
2020 Integrated Report
EPPF Chief Executive and Principal Officer to step down
Member Update: Business Maverick reporting
EPPF appoints new Chief Executive and Principal Officer
Member Regulatory Update
MEMBER UPDATE – APRIL 2021
EPPF INVESTMENT PERFORMANCE UPDATE (Q1, 2021)
EPPF Message from the Chief Executive and Principal Officer
1,2 Testing
Scam alert warning
2021 Tax Certificate re-issue
EPPF Operations - impact of protests
Update: Impact of recent social unrest
Withdrawal of retirement savings by active members
Amended Fund Rules
THE ENHANCED EPPF MOBILE APP FINALLY HERE!
Congratulations to all our winners
The Minimum Individual Reserve (MIR) explained
The EPPF partners with Equites Property Fund in logistics deal
EPPF’s Digital Transformation Journey
2022 Pensioner increase and bonus
Message from the Chief Executive
Member Update - October 2021
2021 Integrated Report
Member regulatory update: Release of the Two Retirement Reform Discussion
Eskom splits off transmission division
Member Update - January 2022
Letter to Pensioners
EPPF appoints new Chief Financial Officer
Member Regulatory Update: Regulation 28 Amendments
Pensioner Tax Update
Message from the Chief Executive and Principal Officer
Member Update March 2022
How EPPF members are helping job sustainability
Pensioner Talk - September 2016
EPPF Member Guide
Pensioner Talk - April 2016
Pensioner Talk - July 2015
Pensioner Talk - October 2014
Pensioner Talk - October 2013
Pensioner Talk - May 2013
Pensioner Talk - December 2012
Pensioner Talk - July 2012
Pensioner Talk - March 2012
Pensioner Talk - October 2011
Pensioner Talk - April 2011
Pensioner Talk - December 2010
Pensioner Talk - July 2009
Pensioner Talk - April 2009
Power Talk - September 2016
Power Talk - April 2016
Power Talk - July 2015
Power Talk - October 2014
Power Talk - June 2013
Power Talk - August 2012
Power Talk - March 2012
Power Talk - October 2011
Power Talk - April 2011
Power Talk - December 2010
Power Talk - May 2010
Power Talk - March 2009
Power Talk - January 2009
Pensioner Talk March 2017
Pensioner Talk November 2017
Power Talk October 2017
Power Talk March 2018
Pensioner Talk 1st Issue 2018
Power Talk 2nd Issue 2018
Pensioner Talk - 2nd Issue 2018
Power Talk 3rd Issue 2019
August Pensioner Talk 2019
September Power Talk 2019
December Pensioner Talk 2019 (Festive Edition)
December Power Talk 2019
Power Talk May 2020
Pensioner Talk May 2020
Pensioner Talk July/August 2020
Power Talk July/August 2020
Pensioner Talk - November/December 2020
Power Talk - November/December 2020
Pensioner Talk June 2021
Power Talk - June/July 2021
Pensioner Talk November 2021
Power Talk October - November 2021
Pensioner Talk Newsletter April 2022
Power Talk Newsletter April 2022
What is the difference between a defined benefit and a defined contribution fund?
Can I borrow money against my pension benefit for a loan or my bond?
What happens if my queries are not getting resolved?
How is the Board of Trustees appointed?
How is a section 37C death benefit distribution determined?
In-service members FAQs
Deferred pensioners FAQs
Pensioners and beneficiaries FAQs
Retirement reform FAQs
uygyugugu kjhiu iji
Can I choose an investment portfolio that my funds can be invested in?
Does the EPPF have both Pension and Provident Fund?
Can you pay my withdrawal benefit to the Eskom Finance Company?